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It would not have passed a stress test.
by Marazan 4y ago
It would not have passed a stress test.
- TMWNN 4y agoLarry Summers and Dan Tarullo explicitly confirm that SVB would have passed a Fed stress test in 2022. <https://www.youtube.com/watch?v=cYgz4KSRPww#t=5m10s https://www.youtube.com/watch?v=cYgz4KSRPww#t=5m10s>
- TMWNN 4y agoThe SF Fed's warnings last year were that, warnings; SVB management did not listen (quite possibly because the bank lacked a CRO for most of the year). That's not the same thing as the bank failing an actual, formal stress test. While SVB and Credit Suisse's collapses' causes are directly unrelated, depositor outflows were involved in both, as opposed to fundamental issues with their balance sheets. Credit Suisse's Tier 1 ratio was as good as that of UBS or any other big European bank. <https://www.wsj.com/articles/credit-suisses-death-gives-birth-to-new-type-of-bank-crisis-39bee5b9 https://www.wsj.com/articles/credit-suisses-death-gives-birt...> At the end of the day, a loss of clients' faith in a bank is something that no stress test can directly measure ahead of time. EDIT: SVB's Tier 1 ratio was 12%, among the highest for US regional banks. <https://www.morningstar.com/articles/1144363/which-bank-stocks-are-most-at-risk-of-a-liquidity-crisis https://www.morningstar.com/articles/1144363/which-bank-stoc...>